PropertyRadar Community

Bought a 2nd at Trustee Sale

Sean, maybe you can help (PLEASE!)… A few weeks ago in Sept 2010, we bought a home (er… i mean a LOAN) at a Trustee Auction for $137K. Then we found out a week later that we only purchased the 2nd loan. The first loan is still there and it’s $380K !!! The home is worth less than that, probably around $325K. We immediately asked the Trustees for rescission, alot of emails and an office visit!.. they wouldn’t do anything. Then we asked the bank (Wells Fargo/Wachovia), alot of letters! …they don’t seem to want to do anything (we havent heard from them.) Should we still keep sending rescission letters to the banks??? If we don’t hear back from them, what’s next? Are there Time Limits for all this…?

I hate to hear this. I’ve had this happen a couple of times and have been fortunate to get a rescission in both cases (we had carefully done our research, and the lender had played games that we threatened to take them to task for).
Try talking to the homeowner and see if they had some reason the bank should not have foreclosed (like a letter agreeing to postpone). Outside of that, and as much as I hate to say it, you may be stuck. If so your best bet is not to throw good money after bad and just let the first foreclose. If it’s vacant and there is some time before the first is going to foreclose perhaps you can get a few months rent (would be good to be honest with the tenants that the home will likely be foreclosed on in the future). Won’t help much, but perhaps its something. If the owner is still there, they technically owe you rent from the day of the sale as well. Good luck.

Sean, Thanks, but it IS hard to hear that we possibly lost $137,000!!! The (even more) complicated situation here is… there was also a judgment on the house for $550K (or $485K) in the 3rd place. By purchasing the 2nd loan at auction, most people say that eliminated the judgment. So I’m sure Wells Fargo is happy we purchased that loan to eliminate the judgment, and for that matter… the owner of the 1st is probably happy too so I’m not so sure how much she would want to work with us. However, the plaintiff in the court case (that judgment) probably IS NOT happy that we were bamboozled into purchasing that 2nd loan since it eliminated his judgment. [We really feel as though somehow, in some way, we were set up…? Am I wrong to think that? The realtor we were working with was VERY insistent that we purchase this property. As I unravel the situation (and the shock slowly wears off) I’m starting to see the layers here.] / We think that the 2nd loan was keeping the 1st loan current because the 1st isn’t late (yet). / We want to get an Attorney but the more experienced ones in these situations will cost upwards to $40-50K. We just can’t afford to lose MORE money if it’s a losing case. / As far as renting the place, that’s difficult too because the pool is not filled with water (well, I guess I could try to rent it out with an empty pool). Also, if we’re renting, we would need insurance. Can we even get insurance on a house that’s not in our name? (as far as we know it’s not in our name) because we never transferred that “Trustee Deed upon Sale”. An Attorney told us NOT to transfer it, that the Trustees would do it for us. / The original owner is out of state and the place is vacant (and it’s in great shape actually, ready for a renter as is, except for the empty pool). Sean or Michele, Any more advice would be helpful…also, if you’re interested let’s email or talk outside of postings… we are desperate. We are not rich people. I’m a public schoolteacher. We are hardworking people who save money, drive older cars, don’t go out to eat… $137,000 was almost all our savings. We just can’t believe this has happened to us! Paul and Todd


Answered by Paul

Tue Oct 12th 2010 at 8:49am

Paul, Using FCRadar I believe I have found the house for which you have purchased the second. Something definately seems strange that the NOD filing on a initial loan of $124K is $13K. Seems high to me unless they waited almost 2 years to file an NOD. I would be curious to know the charges,fees, and unpaid principal they used determine a published bid of $139K. Maybe they were keeping the first current? Is this an acceptable charge for the 2nd to pay? I don’t know the answers but I feel for your situation…?


LarryThu Oct 14th 2010 at 8:40am

Yes, I believe a second can make payments on a first to protect their position. Also we are seeing higher and higher past due amounts as lenders delay foreclosures longer.?


SeanThu Oct 14th 2010 at 11:15am

Hi Paul, The judgement in a 3rd position would have been wiped out regardless of who purchased the property at trustee sale. The first is in a secure position so it doesn’t matter to them if the property went back to the bank or sold to an investor. The only one to “benefit” is the 2nd because they did not take the property back and collected a hefty sum from you at Trustee Sale. The Trustee will prepare the Trustees Deed and send it to you to record. You now own the property but you own it with a 1st mortgage. If the 1st forecloses then your ownership would be wiped out. Sean made a great point to contact the previous owner. You are looking for ANY reason why the sale should be rescinded. You may have a potential errors and omissions claim but you would want to talk to your realtor about that. As a very long shot you may want to contact your elected officials. You have a very good story that may get the attention of someone that is willing to help (or at least make the calls). I wish I could think of something else that you could do. This is such an unfortunate situation.


Answered by Michelle

Tue Oct 12th 2010 at 2:17pm

If the lis pendens is improperly filed, you may have a claim for slander of title. If the lawsuit is still pending and you are trying to short circuit it, I suggest a Rule 11 motion (in federal court) or a 128.7 Sanctions motion in state court. Lastly, if you have a pending contract for sale, you may have a claim against the borrower for intentional interference with contract/prospective economic advantage. You are a BFP and California’s law favor the finality of sale to you.


Answered by Julia M. Wei, Esq.

Sun Aug 21st 2011 at 8:18pm

Julia - I know you are new here. Just wanted to point out that you filed a reply, here, to a year OLD post. (Filed 8/27/2010). It took me a while to find your reply because it was attached WAY up the line. Just occurred to me, you probably won’t see this!!


Answered by miketh

Tue Aug 23rd 2011 at 12:21am

I saw the same Mike. Hopefully she keeps posting though as it was an interesting response.


Answered by Sean

Tue Aug 23rd 2011 at 7:52am